Economic Indicator Drops
October 22, 2001
A barometer of future U.S. economic activity fell in September. The New York-based Conference Board reported Monday its Index of Leading Economic Indicators fell 0.5% in September.
The decline in the index follows a revised 0.1% drop in August and is the largest one month drop since January 1996.
Newport Communications Senior Economist Jim Haughey says through August the index of leading indicators has shown diminishing month to month declines, suggesting that enough inventory cutting had been done to enable a modest fall pickup in the economy.
“The huge September decline in the index is due mostly to the shock effect of the Sept. 11 attacks on the stock market - now largely reversed - and the labor market - not reversed, but not declining at the mid-September pace any longer,” he says.
Haughey predicts a partial recovery in the index is likely in October, but the decline in September was big enough to signal that economic prospects are indeed now lower over the next year.
He notes a recovery is usually preceded by three consecutive increases in the Index of Leading Indicators. That can not happen now until January.